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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Andrew Tellijohn
November 2007

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Upsize Stages: Drafting busine

UPSIZE STAGES: THE EARLY YEARS

04 :: Drafting business documents.

Some documents are
musts at the outset,
others can wait

While many consultants and entrepreneurs will advise you to be frugal in most aspects of starting a business, this is one area most agree is worth spending some money on. The biggest mistake entrepreneurs make is hiring cheap when it comes to accountants and lawyers because going on the cheap can end up costing more in the long run.

Still, the area of foundation business documents might be one way to test whether a potential service provider really wants a long-term relationship with you, as many claim.

These documents are important and they shouldn?t be done without legal consultation. And they must be done well or you could put your business in peril. But it?s important to realize that many oft-filed business documents are unnecessary at the start-up stage and do nothing but rack up unnecessary expenses when cash is often tight. A good lawyer, rather than trying to get you to file all these time-consuming documents right away, will know when they are necessary and will explain why.

For example, there?s no need to put together an employment agreement until you are planning to hire employees. Likewise, buy/sell agreements are important if you are worried about reacquiring the shares of a partner in failing health someday, but are pointless if you are the single shareholder.

Lawyers with an interest in a long-term relationship will forego initial higher fees in anticipation of doing much work with the entrepreneur over time.

That said there are some documents required from the start. The articles of incorporation (or articles of organization for LLCs), which state a corporation?s name, principal place of business, corporate purpose, a registered agent authorized to accept delivery of certain legal documents, and stock information, are required in most states. In Minnesota they are filed with the secretary of state. The company also may be required to have shareholders ratify bylaws and to obtain local licenses to operate a business.

Again, consulting legal representation on these issues is wise, but should you choose to go it alone, you can get assistance from several organizations. The Minnesota Department of Employment and Economic Development publishes ?A Guide to Starting a Business in Minnesota,? available online or in hard copy.

There are several other documents you?ll want to consider. Noncompete agreements are good to have, though courts are making them harder to enforce. They are best if narrowly tailored. Confidentiality agreements are similar, and it?s suggested that any document you want kept private be marked as such.

Finally, when you start a business it?s not a bad idea to take a look at some worst-case scenarios. For example, if you are starting a business with a partner, especially if that partner is also a friend, you?ll want to at least consider what will happen if the relationship goes sour. It?s a good idea to put in writing a partnership agreement spelling out what happens if things go bad. Samples of these documents can be found easily online, but again, with this and other foundation business documents it?s a best practice to include business attorneys in the process.

And all financial transactions, such as loans to the business or equity investments by shareholders, must be documented properly.